United States of America v. Kemp
Filing
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MEMORANDUM AND ORDER GRANTING 9 Motion for Default Judgment: As set forth in the attached, the Court grants the Governments motion for a default judgment and awards damages in the amount of $13,091.29 for unpaid principal and interest through October 30, 2015, $477.00 in costs, and post-judgment interest pursuant to 28 U.S.C. § 1961(a). The Clerk of Court is respectfully requested to enter judgment of 13,568.29 against Kemp and terminate the case. Ordered by Judge Pamela K. Chen on 10/30/2015. (Chan, Grace)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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UNITED STATES OF AMERICA,
Plaintiff,
MEMORANDUM & ORDER
15-CV-02419 (PKC)
- against KENNETH G. KEMP
a/k/a KENNETH G. KEMP, JR.,
Defendant.
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PAMELA K. CHEN, United States District Judge:
Plaintiff, the United States of America (“the Government”), commenced this action against
Defendant Kenneth G. Kemp a/k/a Kenneth G. Kemp, Jr., seeking to recover student loan debt
owed to the Government and the costs of this action. Despite proper service of the summons and
complaint, Defendant has failed to plead or otherwise defend this action. The Government now
moves for an entry of default judgment against Defendant. (Dkt. 9.) For the reasons set forth
below, the Court grants the Government’s motion and finds that the Government is entitled to: (1)
the unpaid principal of the student loans in the amount of $10,038.56; (2) interest through the date
of judgment (October 30, 2015) in the amount of $3,052.73; (3) administrative costs in the amount
of $477.00; and (4) post-judgment interest, to be calculated pursuant to 28 U.S.C. § 1961.
BACKGROUND
In a Complaint filed on April 29, 2015, the Government alleges that Defendant failed to
repay student loans he borrowed in 1989. (Dkt. 1 (“Compl.”).) The Government seeks to recover
the unpaid principal balance of the loans, plus interest and the costs of this action. 1 In support of
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Although the Government requests attorney’s fees in its Complaint (see Compl. ¶ 7.B),
it withdraws that request on motion for default judgment. (Dkt. 9-1 (“Sucher Aff.”) ¶ 20).
its claim, the Government attaches to its Complaint two sworn Certificates of Indebtedness
(“COIs”) from the Department of Education (“DOE”). (Compl. Exs. A, B.) The COIs show that
Defendant executed promissory notes for student loans totaling $6,625.00 from Norstar Bank (the
“Bank”) on or about May 26, 1989. (Id.) These loans were disbursed to Defendant in their entirety
between June 23, 1989 and August 2, 1989, at a variable rate of interest to be established annually
by the DOE. (Id.) The loans were guaranteed by the New York State Higher Education Services
Corporation (“NYSHESC”) and reinsured by the DOE under loan guaranty programs authorized
by Title IV-B of the Higher Education Act of 1965, 20 U.S.C. 1071 et seq. (Id.)
On January 24, 1998, Defendant defaulted on the loans. (Id.). The Bank filed two claims
on the loan guarantees, which the NYSHESC paid in the amounts of $7,197.90 and $2,976.57.
(Id.) The DOE reimbursed the NYSHESC for these amounts under its reinsurance agreement.
(Id.). On April 6, 2011, the NYSHESC assigned its right and title to the loan to the DOE. (Id.).
The Government thereafter sought collection of the outstanding debts from Defendant, but
Defendant “has neglected and refused to pay the same.” (Compl. ¶ 7). The two COIs show that
as of January 27, 2015, a total debt of $12,839.50 remains outstanding. (See Compl. Ex. A (first
COI showing a total debt of $9,235.36) and Ex. B (second COI showing a total debt of $3,604.14).)
Defendant was duly served with the Summons and Complaint in this action on May 26,
2015. (Dkt. 6.) Because Defendant did not file an answer or otherwise respond to the Complaint,
the Government requested a certificate of default on June 19, 2015. (Dkt. 7.) On July 7, 2015, the
Clerk of the Court certified Defendant’s default pursuant to Rule 55(a) of the Federal Rules of
Civil Procedure. (Dkt. 8.) On July 21, 2015, the Government moved for default judgment. (Dkt.
9 (“Motion for Default”).) Defendant has not filed any opposition.
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DISCUSSION
I.
Default Judgment
A. Liability
Rule 55 of the Federal Rules of Civil Procedure establishes the two-step process for a
plaintiff to obtain a default judgment. First, “[w]hen a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by
affidavit or otherwise, the clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). Second,
after a default has been entered against a defendant, and the defendant fails to appear or move to
set aside the default under Rule 55(c), the court may, on a plaintiff’s motion, enter a default
judgment. Fed. R. Civ. P. 55(b)(2). In light of the Second Circuit’s “oft-stated preference for
resolving disputes on the merits,” default judgments are “generally disfavored.” Enron Oil Corp.
v. Diakuhara, 10 F.3d 90, 95–96 (2d Cir. 1993). “Accordingly, just because a party is in default,
the plaintiff is not entitled to a default judgment as a matter of right.” GuideOne Specialty Mut.
Ins. Co. v. Rock Comm. Church, Inc., 696 F. Supp. 2d 203, 208 (E.D.N.Y. 2010) (citing Erwin
DeMarino Trucking Co. v. Jackson, 838 F. Supp. 160, 162 (S.D.N.Y. 1993)).
In determining whether to issue a default judgment, the Court has a “responsibility to
ensure that the factual allegations [in the plaintiff’s pleadings], accepted as true, provide a proper
basis for liability and relief.” Rolls-Royce PLC v. Rolls–Royce USA, Inc., 688 F. Supp. 2d 150,
153 (E.D.N.Y. 2010) (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981));
see Transatl. Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d at 108 (the court “deems
all the well-pleaded allegations in the pleadings to be admitted” for purposes of deciding a default
judgment motion). In other words, “after default . . . it remains for the court to consider whether
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the unchallenged facts constitute a legitimate cause of action, since a party in default does not
admit conclusions of law.” Rolls–Royce PLC, 688 F. Supp. 2d at 153 (citation omitted).
The Court finds that the factual allegations in the Complaint and the COIs establish
Defendant’s liability. Here, the DOE reimbursed the student loan guarantor, the NYSHESC, for
the amounts it paid on the loan guarantee when Defendant defaulted, and on April 6, 2011, the
NYSHESC assigned its right and title to the loan to the DOE. (Compl. Exs. A, B.). Consequently,
Defendant is liable to the Government on his outstanding debt on the loans. See 20 U.S.C. § 1080.
B. Damages
“While a party’s default is deemed to constitute a concession of all well[-]pleaded
allegations of liability, it is not considered an admission of damages.” Greyhound Exhibitgroup,
Inc. v. E.L.U.L Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (citations omitted). The court has
an independent obligation to assess requests for damages, which “usually must be established by
the plaintiff in an evidentiary proceeding.” Id.; see also Fed. R. Civ. P. 55(b)(2) (providing that
“the court may conduct . . . [a] hearing[]” to determine the amount of damages on default
judgment). The Court of Appeals for the Second Circuit, however, has approved making such a
determination without a hearing where detailed affidavits and other documentary evidence provide
the court with a sufficient basis for doing so. Transatl. Marine Claims Agency Inc., 109 F.3d at
111 (citing additional cases). On a motion for default judgment, a plaintiff has the burden to prove
damages to the court with a “reasonable certainty.” Credit Lyonnais Secs. (USA), Inc. v. Alcantara,
183 F.3d 151, 155 (2d Cir. 1999) (citation omitted).
The Government seeks to recover the unpaid principal and interest on the loans through
the date of judgment, costs for filing and service of process, and post-judgment interest pursuant
to 28 U.S.C. § 1961. (Compl. ¶ 7; Sucher Aff. ¶¶ 22–23.) The Government supports its claim for
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damages with the following documents: the two COIs; the affirmation of the Government’s
attorney, Michael T. Sucher; and a bill from T.M.S. Services, Inc. showing fees incurred for the
service of process on Defendant (Dkt. 9-3, Ex. 2 Bill from Process Server). These submissions
provide a sufficient basis for the Court to determine damages.
The Higher Education Act of 1965 provides that the Government is entitled to the unpaid
principal and accrued interest on federally insured student loans in default. See 28 U.S.C. §
1080(a). The Government is also entitled to recover reasonable costs associated with the collection
of the defaulted loan. Id. § 1080(b). Based on the Government’s submissions, the Court finds the
amount of the damages are as follows:
Unpaid Principal Balance. According to the two COIs, a total of $10,038.56 in principal
remains due and owing to the Government. (Compl. Ex. A (first COI showing unpaid principal in
the amount of $7,197.90) and Ex. B (second COI showing unpaid principal in the amount of
$2,840.66); see also Sucher Aff. ¶ 19 (same).). The Court accordingly awards the Government
$10,038.56 in principal.
Pre-Judgment Interest. In its affirmation, the Government calculated that $2,953.54 in
interest was due as of July 13, 2015. (Sucher Aff. ¶ 19 (calculating that $2,147.14 accrued on the
first claim and $806.40 on the second claim).) The Court has reviewed the Government’s
calculation of interest through July 13, 2015 and finds that it is correct. The Court now calculates
the interest on each of the two claims from July 14, 2015 through the date of judgment at the rates
provided by the Government—i.e., per diem interest of $0.67 on the first claim and per diem
interest of $0.24 on the second. (Sucher Aff. ¶ 23.) The Court awards additional interest of $99.19
for a total of $3,052.73 in interest. 2
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The Court calculated this interest as follows: 109 days x ($0.67 + $0.24) = $99.19.
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Costs and Fees. The Court also awards the Government costs consisting of this Court’s
$400 filing fee, 3 as well as expenses for service of the summons and complaint in the sum of
$77.00. (See Motion for Default ¶ 21; Ex. 2 Bill from Process Server.). Thus, the Court awards
the Government a total of $477.00 in costs.
Post-Judgment Interest. Finally, the Court awards the Government post-judgment interest
on its monetary award, to be calculated pursuant to 28 U.S.C. § 1961. See 28 U.S.C. § 1961(a)
(“Interest shall be allowed on any money judgment in a civil case recovered in district court.”).
Such interest “shall be calculated from the date of entry of the judgment, at a rate equal to the
weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors
of the Federal Reserve System, for the calendar week preceding the date of judgment.” Id. This
interest is to be “computed daily to the date of payment.” Id. § 1961(b).
CONCLUSION
For the above reasons, the Court grants the Government’s motion for a default judgment
and awards damages in the amount of $13,091.29 for unpaid principal and interest through October
30, 2015, $477.00 in costs, and post-judgment interest pursuant to 28 U.S.C. § 1961(a). The Clerk
of Court is respectfully requested to enter judgment and terminate the case.
SO ORDERED.
/s/ Pamela K. Chen
PAMELA K. CHEN
United States District Judge
Dated: October 30, 2015
Brooklyn, New York
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Title 28 U.S.C. § 2412(2) provides that the Government is entitled to the filing fee even
if it did not actually pay a filing fee in the action.
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